I’ve often posted about “accretive innovation,” new medical technologies that cost a lot, and offer only a small portion of patients what is often only a tiny benefit. I've talked less about the consequences of when prices are too low - which means we'll not obtain the potential societal benefits of a new drug.

First, an example of accretive innovation.

In 2001, Xigris (human activated protein C, Lilly) was approved for use in severe sepsis based on a small study. The drug was heavily marketed by Lilly – including hiring a PR firm and secretly funding an ethics task force which came up with guidelines that promoted Xigris use. Subsequent studies showed that the drug was associated with a higher risk of brain bleeding and did not improve survival rates. The drug was withdrawn from the market last fall. The result of all of this marketing is that a wildly expensive drug ($8000 per dose) gained high market acceptance; sales were $200 million per year.

I’m reminded of the Xigris story by the New York Times last week, which reported that tranxemic acid, a dirt-cheap generic medication, could save up to 128,000 lives a year, 4000 of them in the US.

From the Times report:

For months, a simple generic drug has been saving lives on America’s battlefields by slowing the bleeding of even gravely wounded soldiers.

Even better, it is cheap. But its very inexpensiveness has slowed its entry into American emergency rooms, where it might save the lives of bleeding victims of car crashes, shootings and stabbings — up to 4,000 Americans a year, according to a recent study.

Because there is so little profit in it, the companies that make it do not champion it.

This isn’t the first time we’re seeing the ugly side to drugs costing too little. We have serious shortages of generic oncology medications and generic attention deficit disorder medications right now. We need effective drug company marketing to bring pharmaceutical innovations to physicians – but disseminating knowledge about drugs is difficult if there is no one with a profit motive to do so.

It’s obvious that we can’t afford ridiculously high prices for drugs. It's a bit less obvious but no less true that we need high enough prices for effective drugs that their makers will manufacture them and market them for appropriate use.